Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the VanEck Morningstar Wide Moat ETF (MOAT) is a smart beta exchange traded fund launched on 04/24/2012.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is sponsored by Van Eck. It has amassed assets over $13.84 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. MOAT, before fees and expenses, seeks to match the performance of the Morningstar Wide Moat Focus Index.

The Morningstar Wide Moat Focus Index tracks the overall performance of the 20 most attractively priced companies with sustainable competitive advantages.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.47%.

The fund has a 12-month trailing dividend yield of 1.42%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Healthcare sector - about 27.70% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Gilead Sciences Inc (GILD) accounts for about 3.48% of total assets, followed by Bristol-Myers Squibb Co (BMY) and Walt Disney Co/the (DIS).

Its top 10 holdings account for approximately 28.12% of MOAT's total assets under management.

Performance and Risk

So far this year, MOAT has lost about -3.59%, and was up about 2.24% in the last one year (as of 03/21/2025). During this past 52-week period, the fund has traded between $83.97 and $98.73.

MOAT has a beta of 1.04 and standard deviation of 18.80% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 53 holdings, it effectively diversifies company-specific risk.

Alternatives

VanEck Morningstar Wide Moat ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard S&P 500 ETF (VOO) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. Vanguard S&P 500 ETF has $592.43 billion in assets, SPDR S&P 500 ETF has $607.06 billion. VOO has an expense ratio of 0.03% and SPY charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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VanEck Morningstar Wide Moat ETF (MOAT): ETF Research Reports

Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report

Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report

The Walt Disney Company (DIS) : Free Stock Analysis Report

SPDR S&P 500 ETF (SPY): ETF Research Reports

Vanguard S&P 500 ETF (VOO): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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